Home Inspectors Liability: Solutions Outside the Courtroom

Special for Home Inspectors

Editor's Note: Check with your E&O provider about their position on arbitration and/or mediation.

Home Inspectors Liability: Solutions outside the Courtroom

By Jeffrey Kaufman

Most of us who have spent any time working in a position related to the field of construction have probably witnessed some type of conflict with a dissatisfied customer. As a home inspector this is especially true. You are assisting clients with one of their most valued and costly purchases, so there is little room for error; even the best inspectors face concerned or angry clients at times. 

Settling claims against your business, even if you win, are getting more expensive and taking more time to resolve in a traditional court process, making the use of alternative dispute resolution (ADR) methods more popular. 

Arbitration

Up to this point the ADR process employed most often by trade professionals has been arbitration, as many inspectors use contracts with arbitration clauses built in.  The arbitration process does offer several advantages over litigation, which helps to explain this trend.  Where litigation can take months and sometimes years, due to the availability of your attorney and the already stretched capacities of civil courtrooms and judges, arbitration can be a relatively quick process.  Arbitrators can be contacted and prepared to hear a case within a much shorter time than getting a court date. It is also a little less formal than civil court with fewer norms and guidelines for the proceedings, which makes preparing and presenting your case less intensive.  Finally, arbitration generally tends to be less expensive than litigation with fees ranging from around $150-$500 per hour for the arbitrator.

Arbitration does have drawbacks.  One in particular is that although it is less expensive than litigation, it still requires a substantial investment.  Even though there are fewer formalities than court, most trade professionals will need an attorney to help prepare and present their case.  Arbitration is also similar to a trial in that the power to decide is completely out of your hands.  You simply present your case as you would with a judge and the rest is up to the arbitrator. The final drawback regarding arbitration is that it is a highly competitive process by nature and does not take into account maintaining your relationship with your client. This is important because of the value of referrals for home inspectors.  A strained relationship with your client can extend to the agents with whom you work as well.  Even if you win, the victory may be a hollow one if that client sends future business to your competitor.

Mediation

Another ADR option is mediation.  Mediation can be quicker and less expensive than litigation and arbitration, and has the ability to maintain or even enhance your relationship with your client.  Mediation may be confusing or unknown to some, but in simple terms it is nothing more than a negotiation between two parties in dispute with the help of a neutral third person. Unlike in arbitration or litigation, where someone else (the judge or the arbitrator) hears the "facts" and then makes the decision, in mediation the parties themselves make the decision on how to settle the dispute.  Participation is voluntary and confidential and the opportunity for the parties to work together on a solution leaves room for much more creativity than the other two processes mentioned above.  You may be wondering why mediation would work if you have already tried to negotiate with the other party unsuccessfully.  The answer rests with the neutral third person.  Disputes are emotional, but having someone who has no vested interest in the outcome can help keep the parties on task and diffuse much of the emotion leading to clearer heads and better solutions.